Operational Risk Management free essay sample

And very difficult to predict. Scenarios are the outward manifestation that leads to loss, and/or completing the cycle. In addition we have the ORM life cycle and process. To manage operational risk we must devise ways of measuring, prioritizing, monitoring and thoroughly reduce our exposure. The ORM life cycle offers an illustration of the concepts explained in this section. Then we have impact analysis, which is the technique used to determine the organizations tolerance and characteristic pattern of loss arising from disruption. The resulting priority and time- rame data is used to determine loss arising from specific incidents and is used in risk assessment. It is also used to establish the time-frames for recovering functions, processes and systems in continuity planning. We also have something called risk assessment which involves the collection of data in relation to people, processes, systems and environmental circumstances, concluding in a threat profile and a gap profile. We will write a custom essay sample on Operational Risk Management or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It is an expressive list of the threats that currently affect the organization with estimates of probability. The latter identifies weaknesses in the business that allow hreats to spread with great disruptive effect. The assessment combines impact analysis and probability data to prioritize the plugging of gaps, proposing, cost- justifying and comparing strategies for improvement. Then we have what is called continuity planning which offers the ultimate backstop where risk improvement measures have known to be unsuccessful or were unsuitable and the organization faces great disaster. It identifies what people, processes, systems, and other structures must be provided to the firm in good time to guarantee and preserve its bility to exist. Last but not least, we have assurance, which is nothing but a set of activities that help guarantee that your continuity provisions work. Training encourages staff to build up a consistent understanding of risk and continuity issues , building familiarity with aspects that could affect them. Periodic review or audit ensures your continuity provisions still reflect the needs of the business. Preparation and testing offer controlled means of simulating real incidents, ironing out problems under safe conditions In addition to this, both the U. S. Department of Defense and the U. S. Navvy have come up with different types of risk management tools and processes that have become useful and part of their every day routine. The U. S. Department of Defense has come up with four principles for ORM: Accept risk when benefits outweigh the cost Accept no unnecessary risk Anticipate and manage risk by planning Make risk decisions at the right level There are three levels when talking about ORM: In Dept, Deliberate, and Time Critical. With these comes different processes that each one has to go through before being approved. In dept risk management is used before a project is implemented, when there is plenty of time to plan and prepare. Some examples may include training, drafting instructions and requirements, and acquiring personal protective equipment. For in dept risk management, the International Organization for Standardization defines the risk management process in a four-step model: Establish context Risk assessment Risk identification Risk analysis Risk evaluation Risk treatment 3. 4. Monitor and review This process is cyclic as any changes to the situation requires re-evaluation per step one. Deliberate risk management is used at routine periods through the implementation of a project or process. Some examples may include quality assurance, on-the-Job training, safety briefs, performance reviews, and safety checks. For deliberate risk management, the U. S. Department of Defense has come up with a five-step process: Identify hazards Assess hazards Make risk decisions Implement controls Supervise and watch for changes Time critical risk management is used during operational exercises or execution of tasks. It is defined as the effected use of all available resources by individuals, crews, nd teams to safely and effectively accomplish the mission or task using risk management concepts when time and resources are limited. Some examples may include execution check-list and change management. This type of risk management process requires a high level of situational awareness. For time critical risk management, the U. S. Navvy has come up with a five-step process: Assess the situation The three conditions of the Assess step are task loading, additive conditions, and human factors. Task loading refers to the negative effect of increased tasking on erformance of the tasks. Additive factors refers to having a situational awareness of the cumulative effect of variables or conditions. Human factors refers to the limitations of ability of the human body and mind to adapt to the work environment like stress, fatigue, confusion, etc. Balance your resources The three ways to balance resources are balancing resources and options available, balancing resources verses hazards, and balancing individual verses team effort. Balancing resources and options available means evaluating and leveraging all the nformational, labor, equipment, and material resources available. Balancing resources verses hazards means estimating how well prepared one is to safely accomplish a task and making a Judgment call. Balancing individual verses team effort means observing individual risk warning signs. As well as observing how well the team is communicating, knows the roles that each member is supposed to play, and the stress level and participation level of each team member. Communicate risks and intentions, communicate to the right people. In order to do this, the right se of communication style needs to be applied. These include asking questions as a technique to opening the lines of communication, and a direct and forceful style of communication gets a specific result from a specific situation. Do an brief, which simply means to take action and monitor for change. This step is accomplished in three different phases. First, mission completion, which is a point where the exercise can be evaluated and review in full. Second, execute and gauge, which involves managing change and risk while an exercise is in progress. Last, future performance mprovements, which refers to preparing a lessons learned for the next team that plans or executes a task. In addition to all that has been discussed, there is a role that continues to evolve and gain importance in the ORM process, this role is that of a Chief Operational Risk Officer. Not only is this individual responsible for setting up a robust Operational Risk Management function at companies, but also plays an important part in increasing awareness of the benefits of sound operational risk management. The Marine Corps Communication and Electronics School requires us as students o complete and submit an ORM in any case of leave that we may request, before departing from base. Its purpose falls into what any other risk management describes as Just simply avoiding a problem from escalating. Some personal information or data that is required from us as students includes name, rank, and age. Other information required is that of where the location being visited will be and whether it is local, inbound, or outbound (in or out of distance limitations). There is also included a part called small unit leader questions, which contain well eveloped questions that make one think of what is needed or what can make the travel that much easier and smoother.